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What you need to know about comparing auto insurance quotes in Newfoundland and Labrador.

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Who sets auto insurance rates in Newfoundland and Labrador?

In Newfoundland and Labrador, individual insurers set auto insurance rates, which are then regulated and approved by the Newfoundland and Labrador Board of Commissioners of Public Utilities.

What factors determine auto insurance rates in Newfoundland and Labrador?

Auto insurance rates in Newfoundland and Labrador are determined by a variety of factors:

  • Your driving record.
  • The value of your car.
  • Your insurance claims record.
  • Your annual mileage.
  • How you use your car (personal or business).
  • Whether or not any other drivers in the household use your car.

Newfoundland and Labrador is unique in that the provincial government forbids insurers from using some factors to determine auto insurance premiums — factors that are standard criteria in most provinces.

In Newfoundland and Labrador, your insurance premium isn’t affected by the following:

  • Your age.
  • Your gender.
  • Your marital status.
  • Age of your car.
  • Accidents in which you were not at fault.
  • Lapses in insurance coverage (except in cases of licence suspensions and traffic convictions).
  • Being previously refused insurance by another company.
  • Being insured with the Facility Association (insurance pool funded by car insurance companies that specializes in covering high-risk drivers, i.e., the insurer of last resort).

How do Newfoundland and Labrador auto insurance rates compare to other provinces?

Newfoundland and Labrador auto insurance premiums are currently the fourth highest in Canada.

Average auto insurance rates by province

ProvinceAverage Rates
Ontario$1,445
British Columbia$1,680
Alberta$1,251
Newfoundland & Labrador$1,132
Manitoba$1,080
Northwest Territories$978
Nunavut$963
Yukon$812
Nova Scotia$842
Saskatchewan$936
New Brunswick$819
Prince Edward Island$796
Quebec$661*

Source: Insurance Bureau of Canada, 2017

*2016 data

Why are insurance rates in Newfoundland and Labrador so high compared to the rest of Atlantic Canada?

At $1,168 a year, Newfoundland and Labrador drivers pay the fourth highest yearly premiums for auto insurance in the country.

The island province of only about 450,000 people is preceded by the more populous provinces of B.C., Ontario, and Alberta.

Here’s how car insurance rates in the rest of Atlantic Canada compares to the rates in Newfoundland and Labrador:

  • Nova Scotia pays 23% less
  • New Brunswick pays 26% less
  • P.E.I. pays 30% less

The main factor that insurance companies increase rates is claims. If an insurance company has to pay out more in claims than they’re bringing in with premiums,  it triggers a rate increase — not only for the driver who received the award but for everyone insured by the company.

Auto insurance rates in Newfoundland have been continuously rising since 2005.

There are a number of forces in play in Newfoundland and Labrador that explain the province's issue with claims. For one, it’s not mandatory to buy accident benefits, which would normally pay for medical expenses. Next, injured drivers have the right to sue for pain and suffering, loss of income, and other damages stemming from the accident. Lawsuits cost insurance companies big time and drive premiums up for everyone else. Bodily injury claims are higher in Newfoundland in Labrador than they are in other provinces.

The province also leads the country in the number of uninsured drivers on the road. If you’re properly insured and you get into an accident with an uninsured driver, guess who foots the bill? That’s right: your insurance company.

The car insurance problem finally triggered a response from the province in 2018, with a slew of new regulations officially put into action at the start of 2020.

The new regulations aim to decrease auto insurance through a series of incentives and deterrents, including:

  • Pivoting towards a no-fault insurance system. This means that the insurance company for each driver involved in an accident will deal with their own insurance company, regardless of who’s at fault for causing the accident. (In the past, only the insurance company involving the at-fault driver would get involved.)
  • Doubling the deductible policyholders must pay in order to access pain and suffering rewards from $2,500 to $5,000.
  • Enforcing a limit of 120 days to tell your insurance company that you want to make a bodily injury claim.
  • Allowing auto insurance companies to sell usage-based auto insurance plans, where drivers only pay for as much insurance as they need.
  • Requiring auto insurance companies to offer a discount for installing winter tires.

How can I get cheap auto insurance in Newfoundland and Labrador?

There still ways to find savings on auto insurance in Newfoundland and Labrador:

  • Always pay your premiums on time.
  • Choose a vehicle with less susceptibility to theft.
  • Choose a vehicle with more safety and security features.
  • Maintain a good driving history — obey the rules of the road and avoid speeding tickets.
  • Understand and choose the right type of insurance coverage — only choose the coverage that you need.
  • Shop around for the best policy — online comparison sites like LowestRates.ca can help you find the policy that fits your needs.

Is auto insurance required in Newfoundland and Labrador?

Yes. The law requires motorists to carry insurance on their vehicle.

Which‌ ‌providers‌ ‌offer‌ ‌the‌ ‌cheapest ‌insurance‌ ‌in‌ ‌Newfoundland‌ ‌and‌ ‌Labrador?‌

There isn’t one auto insurance provider that provides discounted auto insurance to everyone who applies for a policy. Auto insurance companies don’t compete on price — and for good reason.

Calculating the likelihood a driver is going to be involved in an accident is complex and requires insurance underwriters to weigh a lot of variables. Plus, insurance companies need to balance winning new business with having enough money to pay out claims to their current policyholders (they know to expect accidents to happen).

But each insurance company weighs risk differently and another one may view someone with your driving and insurance history and want to offer you coverage. Each one uses a unique formula to calculate premiums, which is top secret and is never shared with competitors. That’s why it’s important to compare quotes.

How do you know if an insurance company wants your business? They'll offer you a lower rate. The best way to see which ones favours you the most is to compare multiple quotes at once.

‌Does‌ ‌my‌ ‌credit‌ ‌score‌ ‌impact‌ ‌my‌ ‌car‌ ‌insurance‌ ‌premium‌ ‌in‌ ‌Newfoundland‌ ‌and‌ ‌Labrador?‌

No,‌ ‌car‌ ‌insurance‌ ‌companies‌ ‌are‌ ‌banned‌ ‌from‌ ‌using‌ ‌credit‌ ‌scores‌ ‌to‌ ‌rate‌ ‌drivers‌ ‌in‌ ‌Newfoundland‌ ‌and‌ ‌Labrador.‌ ‌Ontario‌ ‌is‌ ‌the‌ ‌only‌ ‌other‌ ‌province‌ ‌to‌ ‌ban‌ ‌this‌ ‌practice‌ ‌outright.‌

‌Which‌ ‌types‌ ‌of‌ ‌insurance‌ ‌are‌ ‌available‌ ‌to‌ ‌drivers‌ ‌in‌ ‌Newfoundland‌ ‌and‌ ‌Labrador?‌

Here are the types of car insurance available in Newfoundland and Labrador:

  • Third-party liability insurance - Covers your liability if you’re involved in an accident where damage is caused to another person’s car. This type of coverage is mandatory in Newfoundland and Labrador.
  • Accident benefits - Pays for medical expenses for injuries sustained in a car accident. This coverage is not included in basic auto insurance policies in Newfoundland and Labrador. It must be purchased extra.
  • Uninsured driver - This coverage pays for your medical costs and the repair or replacement of your property if you’re involved in a car accident. Since Newfoundland and Labrador has the highest number of uninsured drivers in Canada, this extra coverage might be a good idea.
  • Collision - Reimburses you if your car is damaged in a car accident. It will pay for your car to be replaced or repaired. It must be purchased in addition to your basic policy.
  • Comprehensive - Pays for damage done to your car that was not caused by a collision, i.e., a fallen tree or hail. This can be purchased extra.
  • Specified perils - Protects your property against the insurable risks that you specify in your insurance policy. If the risk isn’t in writing, you don’t have coverage for it. This kind of coverage can be purchased extra.
  • All perils - A hybrid of collision and comprehensive policies. This can be purchased extra.

‌Are‌ ‌discounts‌ ‌available‌ ‌on‌ ‌car‌ ‌insurance‌ ‌in‌ ‌Newfoundland‌ ‌and‌ ‌Labrador?‌

Numerous discounts are available to drivers in Newfoundland and Labrador. Applying for discounts is a great way to lower your car insurance costs.

As of 2020, car insurance companies are legally required to offer a discount for installing winter tires. The amount they’re willing to discount is up to the insurance company’s discretion.

Here are some other discounts that are worth looking into:

  • Bundling auto and home insurance policies.
  • Taking a driver’s education course.
  • Installing an anti-theft device.
  • Enrolling in a telematics program, which grants your insurer the ability to monitor your driving via an app and award you discounts of up to 25% if you consistently display good driving habits (insurers are not allowed to penalize you, only offer you discounts).

What is the minimum requirement for auto insurance in Newfoundland and Labrador?

Newfoundland and Labrador residents are required to carry $200,000 in third-party liability insurance on their vehicles. Without the minimum amount of coverage, drivers can't register their cars.

Drivers in this province are also required to hold uninsured and unidentified insurance, which protects them if they're involved in an accident with an uninsured driver or a driver that can't be identified.

Unlike in many other provinces, accident benefits coverage isn't mandatory in Newfoundland, but it's recommended by the provincial government and can be bought from your insurer.

What kind of auto insurance system does Newfoundland and Labrador have?

As of Jan. 2020, when it comes to property damage (damage to your car), each party involved in a collision has to deal with their own insurance company, regardless of who caused the accident. (In the past, only the insurance company of the at-fault driver got involved).

It’s not mandatory to buy accident benefits (in all other provinces, accident benefits are included in a basic policy).

When it comes to injuries, Newfoundland and Labrador operates under the tort system. This lets you sue an at-fault driver for your pain and suffering, wage losses, and other damages related to an accident.

What benefits are covered if I choose to buy accident benefits coverage?

If you buy accident benefits coverage in Newfoundland and Labrador and get into a car accident, here's what your benefits will include:

  • Funeral expense benefits: Up to $1,000.
  • Medical payments: Up to $25,000/person; time limit of 4 years.
  • Disability income benefits: Up to $140/week; 104 weeks for partial disability; lifetime for total disability; unpaid housekeeper $70/week, maximum 12 weeks.
  • Death benefits: Death of head of household $10,000, plus $1,000 to each dependent survivor after first; death of spouse $10,000; death of dependant $2,000.

What are the penalties for driving without insurance in Newfoundland and Labrador?

Newfoundland and Labrador have the most uninsured drivers in the country. And new regulations put into force in 2020 aim to punish uninsured drivers more severely.

If you're convicted of driving without insurance in Newfoundland and Labrador, you'll have to pay a fine that ranges from $2,000 to $4,000 for your first offence. The fine increases to a range of $3,000 to $5,000 for second and subsequent offences.

And there are other penalties that may accompany your fine. If you're charged for driving without insurance in Newfoundland and Labrador, you may also have your driver's licence suspended and your vehicle impounded for 90 days.

The financial safety net for uninsured drivers has also been taken away. In the past, drivers could file claims via the province’s fund for uninsured drivers. Now, drivers are personally responsible for paying for expenses stemming from accidents.

Also, insurance companies are now required to alert the Department of Motor Vehicles when a car insurance policy has been cancelled or allowed to lapse.

What is the minimum legal driving age in Newfoundland and Labrador?

You can begin the licensing process when you turn 16.

To earn your learner's licence in Newfoundland and Labrador, you first have to pass a road theory test and an eye vision test. Then you can hit the open road — as long as you're accompanied by a fully licensed driver. Remember, this supervising driver must sit in the front passenger seat and have a blood alcohol level of 0. You must stay in this licence level for 12 months, or 8 months if you complete an approved driver education course.

How do I get a novice licence in Newfoundland and Labrador?

To earn the next licence level, your novice licence, you must successfully complete a road test. You'll then hold your novice licence for 12 months and your BAC must always be 0 when you drive with this licence.

How do I get a full licence in Newfoundland and Labrador?

After holding your novice licence for 12 consecutive months, you may obtain your full Newfoundland and Labrador driver's licence.

‌Is‌ ‌usage-based‌ ‌insurance‌ ‌available‌ ‌to‌ ‌drivers‌ ‌in‌ ‌Newfoundland‌ ‌and‌ ‌Labrador?‌

Yes,‌ ‌as‌ ‌of‌ ‌2020,‌ ‌usage-based‌ ‌auto‌ ‌insurance‌ ‌is‌ ‌now‌ ‌available‌ ‌to‌ ‌Newfoundland‌ ‌and‌ ‌Labrador‌ ‌drivers.‌ ‌Usage-based‌ ‌auto‌ ‌insurance‌ ‌allows‌ ‌you‌ ‌to‌ ‌pay‌ ‌for‌ ‌only‌ ‌as‌ ‌much‌ ‌insurance‌ ‌as‌ ‌you‌ ‌need.‌

Using‌ ‌a‌ ‌device‌ ‌that‌ ‌you‌ ‌install‌ ‌in‌ ‌your‌ ‌car,‌ ‌or an app, ‌more‌ ‌commonly,‌ ‌your‌ ‌insurance‌ ‌company‌ ‌can‌ ‌determine‌ ‌your‌ ‌mileage‌ ‌with‌ ‌more‌ ‌accuracy.‌

Mileage‌ ‌is‌ ‌a‌ ‌big‌ ‌factor‌ ‌in‌ ‌calculating‌ ‌your‌ ‌ insurance‌ ‌rate.‌ ‌The‌ ‌more‌ ‌time‌ ‌you‌ ‌spend‌ ‌on‌ ‌the‌ ‌road,‌ ‌the‌ ‌more‌ ‌likely‌ ‌you‌ ‌are‌ ‌to‌ ‌be‌ ‌in‌ ‌a‌ ‌car‌ ‌accident.‌

Are Newfoundland drivers allowed to carry digital proof of car insurance?

Yes. Since 2018, drivers in Newfoundland and Labrador have been allowed to carry digital proof of car insurance on their smartphones. You are responsible for making sure that your phone is charged if you are pulled over by police. For more information, contact your insurance company.

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